Divi's Labs m-cap crosses Rs 1 trillion; stock zooms 109% in CY 2020 so far

Divi’s Laboratories entered the elite club of companies with a market capitalisation (market-cap) of Rs 1 trillion after the firm's stock price hit a new high of Rs 3,832, up 3 per cent, on Thursday. 

The stock of the pharmaceutical company surpassed its previous high of Rs 3,763.40, touched on December 10, 2020.

At 10:05 am, Divi’s Labs' market-capitalisation stood at Rs 1.01 trillion, exchange data show. 

Currently, Divis Labs stands at the 30th position among companies having market-cap of over Rs 1 trillion. It is the second most valued pharma company after Sun Pharmaceutical Industries, which has market-cap of Rs 1.40 trillion, data show.

So far in the calendar year 2020, the share price of Divi’s Labs has zoomed 109 per cent, as compared to a 13 per cent rise in the S&P BSE Sensex and a 60 per cent jump in the S&P BSE Healthcare index.

The company, on December 1, had announced the commencement of construction of Divi's Laboratories Unit-III facility (the project) at Kona Forest, Ontimamidi village, Andhra Pradesh from December 7, 2020.

The company said it will be investing about Rs 1,500 crore out of its internal accruals in a phased manner for the implementation of its Unit-III facility. The operations are likely to commence within 12 to 18 months for the first phase of the Project.

“Divi’s Labs is one of the largest generic API (active pharmaceutical ingredient) manufacturers globally and has a successful track record of executing custom synthesis business for innovator customers. Strong positioning of Divi's will help the company in monetising the growth opportunity in API and CRAMS (contract research and manufacturing services) space given its stellar execution track record and it being one of the preferred suppliers,” analysts at ICICI Securities said in a report.

Recent and planned capex of Rs 2,200 crore reinforces our view as Divis is known for expanding capacities with very high business visibility, the report added. 

Key moats of the company have been continuous process innovation, low-cost production, talent retention and longstanding relationships with customers, the brokerage firm said as it initiated coverage on the stock with 'ADD' rating and a target price of Rs 3,960 per share.